Property Owners Awaiting Payment

Some say CHK isn’t sharing the wealth as they had promised

March 4, 2013

WHEELING - When Gary Auber learned Chesapeake Energy was producing an average of 290 barrels of oil per day from the Hickman pad near Dallas Pike Road, he began wondering when he would be paid for his minerals.

"If they are getting that much out of there, you would think we would be getting paid," said Auber, who signed a lease with Chesapeake in late 2010 for about 5 acres at a lease rate of $3,400 per acre and 18.5 percent of production royalties. His acreage is included in Chesapeake's Hickman pad, according to records in the Ohio County Clerk's Office.

Brooke County mineral owner Scott Sonda has about 30 acres of land included in Chesapeake's Ball South well, but said he has not received any royalties yet, either. Sonda signed a $25 per acre natural gas lease with a firm then known as Great Lakes Energy Partners in 2006. That firm later became part of Range Resources, which later assigned the lease to Chesapeake.

Article Photos

Photo by Casey JunkinsChesapeake Energy holds some of its materials in tanks such as these after the company finishes drilling and fracking at a well site.

"They haven't tried to pay me," Sonda said, adding that he has filed a claim with the American Arbitration Association in an effort to resolve the payment dispute.

As Chesapeake continues drilling and fracking wells across West Virginia and Ohio, the company has several successful wells to report. Last week, the Oklahoma City-based driller announced it was collecting oil - as well as dry methane gas and liquids such as ethane, propane and butane - from wells in Ohio and Marshall counties.

Auber said he called Chesapeake's Oklahoma City office shortly after learning about the large quantities of oil, gas and liquids coming from the Hickman pad.

"They asked me if I had signed division orders. I asked them, 'What are division orders?'" he said.

The documents are used by drilling companies to monitor how they should be paying royalties to mineral owners. Auber said the Chesapeake representative told him he should soon receive the papers via mail. Once he returns the completed forms, Auber said he "may" begin receiving payments.

"What if I had not called? They should have explained to us how we would get paid when we signed our leases," he said. "Are they just going to wait until people call to complain before offering to pay?"

One possible reason for delayed payments could involve the need to complete construction of pipelines to transport the natural gas and oil. Producers like Chesapeake are also somewhat dependent on processors such as Dominion Resources, MarkWest Energy or Williams Partners having their infrastructure in place to deal with the gas.

However, Auber said the Chesapeake representative with whom he spoke mentioned nothing about pipelines causing any delays.

Jacque Bland, Chesapeake's manager of corporate communications, said the company would not comment on these individual complaints because of the unique provisions that are found in each lease agreement. For example, a lease may contain a clause that states specifically when a mineral owner should receive payment.

"They need to call the royalty owner number with their lease number and get that clarified if they have questions," Bland said. "That is going to be their best course of action."

Those with questions regarding royalty payments from Chesapeake should call 877-245-1427.